NJ Becomes Second State to Adopt Individual Mandate

On Wednesday, Governor Phil Murphy signed into law a bill that will require all New Jersey residents to have health coverage or pay a penalty. NJ is the second state in the country to adopt an individual health insurance mandate.

NJ lawmakers feared that, with the decision to repeal the federal mandate established under the Affordable Care Act, healthier people would leave the state’s Obamacare market which would cause premiums to spike. As a response, Democratic lawmakers drafted the bill NJ A3380 (18R).

NJ’s mandate mimics the former federal requirement and includes an annual penalty of 2.5% of household income or a per-person charge, whichever is higher. The max penalty when based off household income will be the average yearly premium of a bronze plan. When based on a per-person charge, the maximum penalty will be $2,085. An individual may qualify for a hardship exception if they are unable to afford insurance.

The penalty money the state collects will be used to fund a reinsurance program that was also just signed into law on Wednesday by Gov. Murphy. The reinsurance legislation will establish a program to help insurers cover the cost of the most expensive Obamacare patients. The program is supposed to reduce the average premium increase by 10% to 20%.

Even as the Murphy administration and state lawmakers move forward with these Obamacare stabilization efforts, NJ’s market has been relatively stable compared with many other states. NJ was one of just two markets in the country to gain a new Obamacare insurer in 2018 and had lower-than-average premium increases compared with other federal marketplaces.

The NJ individual mandate is set to take effect on January 1, 2019 allowing the state time to get the word out to residents about the new requirement.

Source: NJAHU and Politico